FORT LAUDERDALE, Fla., July 18 (UPI) -- People shouldn't get excited about the release of $2.3 billion recovered from convicted New York investor Bernard Madoff to pay his victims, advocates said.
Ronnie Sue Ambrosino, formerly of Delray Beach, Fla., said the announcement that trustee Irving Picard would begin distributing money to 1,214 investors gives the wrong impression while another advocate questioned how Picard can pay claims with legal challenges pending, the Palm Beach (Fla.) Post reported Monday.
"I can't tell you the amount of additional angst caused by this one man, Irving Picard," said Ambrosino, Madoff Victims Coalition coordinator. "I don't know how the bankruptcy court allows him to continue this charade."
The first major payout to victims got the go-ahead last week when U.S. Bankruptcy Judge Burton Lifland approved disbursement of $2.3 billion to victims of the largest financial fraud in U.S. history. Picard approved about 2,300 claims of more than 16,000 filed.
Picard is using a "cash-in cash-out" method. If investors withdrew more of their account than they invested, they get nothing. Investors who took some but not all of their funds would get a partial payment. Those who didn't withdraw their investment could get the full $500,000 offered by the Securities Investment Protection Corp., plus a portion of any more money Picard recovers.
Ron Stein, president of the Network for Investor Action and Protection, which challenged Picard's payout parameters, told the Post he thinks 80 percent of the money will be refunded to the wealthiest 20 percent of investors.
"It's too small, affects too few people and took way too long," Stein said. "I would much like to see the smaller investors receive something as they are the ones suffering the most.:
Madoff investors lost about $17.4 billion when he was arrested in 2008. Madoff, 73, is serving a 150-year prison sentence.